Do Firms Trust Universities?

Earlier this week, I attended a seminar at the London Business School by Michaël Bikard – a PhD candidate at MIT – who presented his research on technological inventions. Such inventions are, of course, often patented. Examining these patents allowed Michaël to determine on which technological breakthrough discoveries these inventions were based. Hence, these inventions are basically commercial applications of the more fundamental discoveries.

Fairly regularly, a university or a firm builds on and commercializes its own discoveries but, quite often, such an organisation may also be building on the discoveries of others. That is possible because such fundamental discoveries will often be published, in academic journals such as Nature or Science, and hence are accessible to everyone. And that’s when it gets interesting; because on whose discoveries are firms more likely to build when working on applied inventions: on the discoveries of universities or of other companies?

It matters where a discovery was made

Past research on the topic has basically been comparing apples and oranges, because the discoveries coming out of universities are often fundamentally different from the breakthroughs achieved in firms. Michaël, however, wanted to know whether it mattered to companies where the breakthrough had taken place – regardless of the actual content of the breakthrough. Therefore, he analysed a unique yet fascinating set of technological discoveries, namely the instances where the exact same breakthrough happened at the exact same time in a university and in a firm.

This happens surprisingly often. For example, in the winter of 1999, two teams of scientists simultaneously discovered VR1 (vanilloid receptor1), the receptor for the pain caused by excessive heat. The first team of scientists – who published the finding in Science in May 2000 – was from the University of California in San Francisco. The second team, however, worked at SmithKline Beecham. Hence, the same idea originated simultaneously in a university and in a firm. In total, there were 39 of such simultaneous discoveries in firms and universities between 1970 and 2009.

Then, through patent analysis, Michaël tracked all commercial inventions that built on one of the 39 fundamental discoveries, such as VR1. And he found out that the patenting companies much more often had picked up on the discovery from the publication by the firms. Now, note that these companies could have picked up on the exact same idea from the publication by the universities, but they didn’t – apparently companies scanning for fundamental knowledge pay more attention to the discoveries of other firms. In comparison, they don’t bother with stuff coming out of universities. And that begs the question: why?

Firms don't pay attention to universities

Why do firms not pay attention to the discoveries by universities? It’s not about the content of the discovery; that, in this case, is the exact same thing. To find out, Michaël started interviewing people; the R&D folk that had worked on the commercial inventions.

And they confirmed that they basically did not bother much looking at the stuff coming out of universities. The first reason is because that is simply what companies are used to doing: indeed, most firms I know obsessively monitor their competitors, so if such a competitor comes up with a new discovery, they will notice. They don’t habitually look at universities. Therefore, they miss stuff. And that’s their loss.

The second reason is more worrying (at least, to me, as an academic): The interviewees proclaimed that they don’t pay much attention to the publications about fundamental discoveries by universities because they don’t trust them. Some feel that academics are too heavily incentivised and put under pressure to publish stuff; i.e. the infamous “publish or perish” culture. This, in their view, increases the chance that the publications are dubious, flawed, or outright fraudulent. And they’re not taking any chances with them.

One inventor proclaimed: “It’s a much higher bar [for industry], higher standards, because every error, or every piece of fraud along the way, the end game is going to fail. … Therefore, I have more faith in what industry puts out there as a publication”. Firms don’t pay attention to published discoveries by universities because they think chances are that it is bogus.

I remember that the company MORI used to run surveys on “who do you trust?” – and they probably still do – dividing, among others, the results by profession. Ten years ago, priests and professors used to come out on top; businessmen and politicians near the bottom. I don’t know exactly what people nowadays think of the trustworthiness of businessmen and politicians, but I have a fair idea what happened to the faith in priests and professors.

* This post was written with permission from the presenter, Michaël Bikard.

I am an Associate Professor of Strategy and Entrepreneurship at the London Business School. My latest book is “Breaking Bad Habits: Defy industry norms and reinvigorate your business” (Harvard Business Review Press), which will be released on November 2017.www.freekvermeul...